Nevada Bill Lets Home Insurers Drop Wildfire Coverage—and It Could Cost Homeowners Big

Nevada homeowners in the state’s most fire-prone—and often most expensive—neighborhoods could soon be paying extra just to stay protected. On Jan. 1, a new law took effect granting insurance companies the option to remove wildfire coverage from homeowner and homeowner association insurance policies, pushing residents in wildland-urban interface areas toward stand-alone fire insurance.

The move came after a spike in nonrenewals that the Insurance Commission only saw continuing. The legislature now hopes that letting insurers carve out wildfire protection will keep them in the market. But for homeowners suddenly left without coverage, the new law could mean shelling out for an additional policy.

The change comes as Nevada faces mounting resource pressures. Alongside California and Arizona, the state is locked in a battle to preserve its share of Colorado River water—facing off against four upstream states pushing to reduce downstream allocations.

Legislatures carve out wildfire coverage as insurers pull back

The Silver State is facing down a growing wildfire threat. Currently, it ranks 12th in the nation for both its wildfire risk and the number of homes, nearly 22,000, located directly in harm’s way,  according to the Insurance Information Institute.

That growing risk is already reshaping the state’s insurance landscape. In 2023 alone, 481 policies were nonrenewed due to wildfire exposure, according to the 2025 Nevada Division of Insurance Market Report. 

Applications for new coverage are also hitting a wall. The number of policy applications denied due to wildfire risk nearly doubled in just one year, jumping from 2,439 in 2022 to 4,994 in 2023. The state expects those numbers to rise further in the years ahead.

Assembly Bill 376 was intended to stop the bleeding by giving insurers the ability to exclude wildfire coverage while continuing to write broader homeowners policies. But some industry advocates say the bill may backfire.

“A more likely scenario is that it will be quite harmful to Nevada homeowners, increasing costs and leaving them unprotected,” Michael DeLong, research and advocacy associate at the Consumer Federation of America, tells Realtor.com®. 

He sees the carve-out as part of a broader trend in the insurance industry—one that chips away at coverage and shifts more responsibility to policyholders.

“Consumers will have to buy a homeowners insurance policy that covers various perils such as fallen trees, wind damage, and theft, and then buy another insurance policy that protects them against wildfires. That means increased administrative costs and hassle for consumers,” he explains. 

Rise of insurers of last resort

DeLong’s warnings echo a broader national conversation: How do we insure homes as climate risks grow more severe and threaten more homes?

Flood coverage is already excluded from most standard homeowners policies, and buyers in designated flood zones are required to purchase separate insurance to secure a mortgage. Typically, that coverage comes through the National Flood Insurance Program, a federally backed initiative that provides affordable flood protection to more than 4.7 million policyholders nationwide.

So far, no national equivalent exists for wildfire insurance. Instead, many states offer last-resort options known as FAIR (Fair Access to Insurance Requirements) plans. These state-run or state-mandated programs offer bare-bones coverage to homeowners who can’t obtain insurance through the private market, often at a significantly higher cost and with limited protections.

In California—where wildfire risk and insurer pullback have intensified—enrollment in the state’s FAIR Plan surged to more than 330,000 homes in 2023, more than doubling since 2018.

But Nevada offers no such backstop, creating what DeLong calls a dangerous gap in the insurance landscape.

“If homeowners can't afford standalone wildfire coverage, they face serious problems,” he says.

“There's the obvious question of how mortgage lenders and banks will react to consumers who have homeowners insurance that excludes wildfire coverage—is that enough for these financial institutions? Do they refuse to give mortgages to people without protection against wildfires?”

The cost of stand-alone fire insurance is difficult to pin down, DeLong adds, since premiums vary widely based on home value, coverage levels, and proximity to risk. But for areas at the highest risk, such as Lake Tahoe, prices are likely to sting.

“In areas around Lake Tahoe, for example, wildfire coverage would be quite expensive. Climate change is making wildfires larger, more destructive, and causing them to occur in new areas,” he says.

Luxury homeowners have higher risks, but greater access to niche coverage

Those foci introduce hard questions about who will be able to afford wildfire coverage, and who won’t. The Lake Tahoe region is home to some of Nevada’s most expensive real estate, and even there, homeowners have struggled to find insurance in recent years.

Incline Village is one such example.

Ron Wright, who works with one of the area’s largest insurers, told SFGate that he’s seen multiple homeowners associations unable to secure coverage “at any price.” Individual homeowners across Northern Nevada, he said, have faced even worse conditions.

In some extreme cases, Wright said, he’s seen clients with $20 million properties who opted to carry liability insurance only or went completely uninsured.

While wealthy homeowners may have the means or willingness to assume that level of risk, most Nevadans don’t have that luxury. Mortgage lenders typically require home insurance as a condition of the loan. That means any homeowner with an outstanding mortgage must maintain coverage or face the prospect of having to sell. And selling may not be a viable escape hatch if prospective buyers can’t secure insurance either.

DeLong warns that many homeowners may not even realize the gap in their coverage.

“A lot of consumers aren't familiar with their insurance policies, which are written in difficult to understand language and are often quite confusing, even for experts,” says DeLong. “So homeowners may think they are protected against wildfires when they are not.”

What homeowners should do

In the new insurance and climate risk landscape, mitigation is one of the most effective ways to protect a home and potentially lower insurance costs. 

“The Consumer Federation of America strongly supports mitigation efforts to reduce risk and lower insurance costs, like a state-funded program that would provide $10,000 grants to consumers to harden their homes against wildfires," he says. "We also think that insurance companies should be required to pass along discounts and/or rate reductions to consumers who undertake these measures."

Nevada's Forestry Department offers a number of grants that homeowners and communities can apply for. It's a vital step as the state faces down dwindling water supplies.

As Nevada fights to preserve its share of the Colorado River in ongoing negotiations with California, Arizona, and four upstream states, policymakers face growing questions about how to sustainably support development in high-risk areas. Water scarcity and wildfire risk are no longer separate challenges—they’re deeply connected, shaping where and how people can live in the state.